January 24, 2020
The last 40 years in financial markets have been heavily influenced by a very important factor: falling interest rates. A look at the 10-year US bond yield shows that it peaked in '81 at around 16%, and since then it's been a steady march lower, seemingly inevitably marching towards zero. According to Paul Moore, founder and Chief Investment Officer at PM Capital, this trend has now passed an inflection point. Rates have bottomed in the US and Europe, and inflation might not be as far away as many expect.
"You're slowly seeing the conditions put in place for inflation to be underpinned. Every central bank wants to create inflation. Ultimately, they'll get what they asked for. They might not want it when they finally get it, but they will get it...
He believes that this trend will have far reaching implications across all asset markets, but for equity investors it means that the types of investments that have worked well in the past, won't in the future. And likewise, some investments that have been out of favour, could be due for a comeback.
Tune in to the latest episode of The Rules of Investing, presented by Livewire Markets, to hear his take on which assets are set to benefit and which will suffer.